All Forum Posts by: Marty Boardman

Quote from @Guy Gimenez:

Learn to vet the gurus and you'll figure out real quick most are making a living selling courses, not selling real estate. Nothing wrong with that but they're not being honest most of the time about their real estate holdings / experience. It's like the guy who say they own 12 doors or own 4 apartment complexes, when in fact they're merely a 3% to 5% investor in these products. If I buy $1,000 Dell stock, it doesn't make me the owner of Dell, it just makes me a shareholder. When I get someone trying to pitch me, I always ask them to send me the last 5 HUD's for properties they purchased in the last 2 months. Oddly enough, I never hear back.

I agree it's dishonest for anyone that's selling coaching/courses to claim they're an active investor if they haven't done any deals in the last 12 months. 

That said, just because someone isn't active in real estate doesn't mean they can't be a great teacher/coach/mentor. Bill Belichick is one of the greatest football coaches of all time and he's 70 years-old. He hasn't suited up to play the game in over 50 years. But he knows how to evaluate talent, install a game plan and get the most out of his players.

Personally I prefer a coach that only does coaching. If they have another business, whether it's real estate, marketing, e-commerce, etc. then I don't get their 100% focus. But as you pointed out Guy, vetting is very important. If the guru can't prove their results with real testimonials from past clients then that's a major red flag.

Are you offering them an equity position in the deal? Or are they acting strictly as a lender?

A good place to start is just ask "what kind of return were you hoping to get?" If they give you a lower number than you are willing to pay then it's a win for you! If it's too high you can negotiate down from there.

When I hear someone claim that they "flip" 30, 50, 70 houses a month I automatically assume they are wholesaling. And I suppose this is possible if you have the right team in place and don't mind spending 25K + per month on direct mail, SEO and text message blasting.

That said, there's a HUGE difference between "flipping" houses and fixing and flipping a house. I've done both and each takes a very specific set of skills.

Wholesaling requires you be good at sales, marketing (i.e. lead generation and follow up) and transactional operations. To fix and flip you've got to be good at time management, people management, budgeting and design. In my experience it's rare to find an investor that is successful at wholesaling AND fixing and flipping.

I do believe there are honest coaches out there that have legit programs. I won't drop names because I'm not sure that's allowed in these forms. But my criteria for investing in ANY coaching is simple: if the coach/mentor/guru is getting results for themselves AND for their clients then they can most likely help you too.

Quote from @Annie Johnson:

Quote from @Marty Boardman:

I'm in Arizona so I can't comment on what the best areas are to fix and flip in Florida. But all that matters is MARGIN. If you can make the numbers work then it doesn't matter where the property is located. 

Earlier this year I fixed and flipped a house in the middle of nowhere Wisconsin (about 1.5 hours north of Green Bay). I had to hire crews from there and put them up in a nearby hotel to do the rehab. I also paid for all their meals/cocktails. After the extra travel costs and material delivery I still net a 75K profit. You can bake all these numbers into your offer price (this includes depreciation and extra holding costs, 3-2-1 buy downs, etc). 

There is NEVER a wrong time to fix and flip houses, only a WRONG way. Regardless of what is going on in the economy, if you overestimate the value of the property when the rehab is complete AND blow your budget you will lose money.

ALL that matters is margin. If there is enough spread going into the deal, you will make a profit.

Thanks Marty your post was helpful. 

A few more questions if you don't mind.. I have previously only have done buy and holds so I a trying to learn and absorb as much information as possible before entering my first fix and flip. 

1. How do you go about finding most of your flips. If it was in the middle of Wisconsin and you don't live there how did you identify it?  Did someone give you a lead on it? And if not then what is the best way to identify flips that are not in your immediate area? 
2. Do you do most of the flips from off markets deals or on market? I feel like most opportunities I see on MLS in my area would not provide the opportunity to pay for the repairs, hire people to do the job, pay for their lodging, food, and drinks and still have that big of a profit margin.

Thanks!

You're welcome Annie. And great questions!

#1: About 90% of my flips are either pre-foreclosures or properties I purchase at auction (sheriff's sales). The house I was referring to was a sheriff's sale. I can track these from my office in Arizona and I have boots on the ground in Wisconsin to walk the properties, shoot videos, talk to the owners and complete the rehabs. If you want to build a long distance house flipping business it takes time, but it's worth it IF you're not finding solid margins in your home market.

#2: All of my flips are off-market when I find them. It's been at least 4 years since I found a house on the MLS that had any margin. I used to buy from wholesalers here in Arizona, but I haven't seen a deal in over 3 years that pencils out. So here I target pre-foreclosures. I'm starting a rehab next week on a house in Chandler, AZ that I bought from a woman in foreclosure the day before her auction. Needless to say, she was highly motivated to sell and it's a high margin deal.

Full disclosure...I don't enjoy attending auctions, or contacting sellers in foreclosure, so I train people how to do this for me.

Hope that helps!

Quote from @Jay Hinrichs:

Quote from @Marty Boardman:

I'm in Arizona so I can't comment on what the best areas are to fix and flip in Florida. But all that matters is MARGIN. If you can make the numbers work then it doesn't matter where the property is located. 

Earlier this year I fixed and flipped a house in the middle of nowhere Wisconsin (about 1.5 hours north of Green Bay). I had to hire crews from there and put them up in a nearby hotel to do the rehab. I also paid for all their meals/cocktails. After the extra travel costs and material delivery I still net a 75K profit. You can bake all these numbers into your offer price (this includes depreciation and extra holding costs, 3-2-1 buy downs, etc). 

There is NEVER a wrong time to fix and flip houses, only a WRONG way. Regardless of what is going on in the economy, if you overestimate the value of the property when the rehab is complete AND blow your budget you will lose money.

ALL that matters is margin. If there is enough spread going into the deal, you will make a profit.

neat to see the NUMERO UNO  Podcast guest for BP  Wow..  Rural Wisconsin seems to be making a come back as global warming takes hold.

 Hah thanks Jay! I'll stay here in AZ from October to May :)

I'm in Arizona so I can't comment on what the best areas are to fix and flip in Florida. But all that matters is MARGIN. If you can make the numbers work then it doesn't matter where the property is located. 

Earlier this year I fixed and flipped a house in the middle of nowhere Wisconsin (about 1.5 hours north of Green Bay). I had to hire crews from there and put them up in a nearby hotel to do the rehab. I also paid for all their meals/cocktails. After the extra travel costs and material delivery I still net a 75K profit. You can bake all these numbers into your offer price (this includes depreciation and extra holding costs, 3-2-1 buy downs, etc). 

There is NEVER a wrong time to fix and flip houses, only a WRONG way. Regardless of what is going on in the economy, if you overestimate the value of the property when the rehab is complete AND blow your budget you will lose money.

ALL that matters is margin. If there is enough spread going into the deal, you will make a profit.

Quote from @Malkia Ra:

Quote from @Marty Boardman:

I just went through this process in Arizona. I bought the property and gave the owner 30 days to move out. Fortunately, I held back $20,000 until she provided occupancy. She refused to leave so I kept those funds and then had her evicted. It was simple and straightforward. The county constable showed up and forced her to leave. I had to wait 14 days for her to come back and get her stuff (which she never did) so now I'm in the process of cleaning out the house.

I'm sure there are some subtle differences to the law in Texas, but the previous owner of your property is now a squatter (at least that's what the legal term in Arizona is). Contact a local eviction attorney and get process started ASAP.

Good luck Mauricio!

It's mindboggling that a seller would forfeit any amount of money held from the sale, rather than move on.  $20k and left all of her things behind?  Sheesh.

Yes it's difficult to understand. We did everything we could to convince her to move out. We brought her moving boxes, tape. My assistant even took her out to look at apartments but she still would not leave.

As Chris pointed out, there are judicial and non-judicial foreclosures. I buy foreclosures in Arizona (non-judicial) and Wisconsin (judicial).

The big difference between the two is that in non-judicial states the process is MUCH faster. It's governed by state statute (so the timelines are firm). For example, in Arizona when the notice of trustee's sale is filed the borrower has 90 days to bring their loan current (or pay it off in full) to stop the foreclosure.

In states with a judicial process, the timeline is dictated by the courts. There are judges involved and their calendars can get booked out far in advance. It's common to see a house in a judicial state linger in foreclosure for 2-3 years or more.

There are 3 phases of foreclosure:

1. Pre-foreclosure (this is the period of time between when the borrower is first notified they're in foreclosure and the auction date)

2. Auction (the sale of the property at the courthouse steps or in an attorney's office to the highest 3rd party bidder)

3. REO (now a bank-owned home because no 3rd party bidders purchased the property at auction)

I agree with Chris that overall foreclosure numbers are down the past few years, but they are not "rare". I've bought over 50 properties the past 3 years in pre-foreclosure and at auctions in Arizona and Wisconsin. If you understand how the process works and have the skill/desire there are a lot of opportunities there for you Juan.

Good luck!

I just went through this process in Arizona. I bought the property and gave the owner 30 days to move out. Fortunately, I held back $20,000 until she provided occupancy. She refused to leave so I kept those funds and then had her evicted. It was simple and straightforward. The county constable showed up and forced her to leave. I had to wait 14 days for her to come back and get her stuff (which she never did) so now I'm in the process of cleaning out the house.

I'm sure there are some subtle differences to the law in Texas, but the previous owner of your property is now a squatter (at least that's what the legal term in Arizona is). Contact a local eviction attorney and get process started ASAP.

Good luck Mauricio!

Quote from @Mike Lee:

Hi Joe - thanks for the insight. I have yet to successfully purchase at auction and when I've contacted the seller pre-foreclosure (in CA), they've usually informed me that they'll proceed to auction. I know in theory seller can sell at any time prior to the auction, but practically, is there a point in time when it becomes "too late" and they'd rather go to auction? e.g., is it better to contact immediately after the NOD is filed rather than wait?

What's the process like when putting a deal together pre-foreclosure?  Do you engage an RE lawyer instead of agent to draft the agreement?  Thanks!

Homeowners in foreclosure can be confused, apathetic, angry or in denial. Sometimes all of these! When I make contact with a homeowner in foreclosure I explain to them in a non-threatening way that they have two options:

Option #1: Do nothing and let your house go to auction, which will wreck your credit, put NO cash in your pocket and NO time to find a new place to live and move out with dignity

Option #2: Sell to me (or someone like me) that can stop the foreclosure, give you cash at closing AND give you 30-60 days to move out.

Which option would you like?

Most investors don't have the skills required to stop a foreclosure days, hours or minutes before the auction. But if you can master this you'll close a lot of deals. I find it's better to get there towards the end of the process, not the beginning. When the homeowner first receives their notice they have 30-90 days or more to solve the problem. It's unlikely they'll want to make a deal with you at this point. They have too may other options (sell with Realtor on the MLS, get a new loan, bankruptcy).

Good luck Mike!